Addressing Major Change in Legal Profession (UMD Law Conference)

This is a ”live” blog transcript for the “Addressing Major Changes in Law Practice” presented on April 28, 2010 by the University of Maryland School of Law. For more information on agenda and participants please click HERE.

Readers of this may also be interested to learn of the upcoming conference at the University of Southern California in conjunction with that school’s “The Southern California Innovation Project (SCIP).” This event has been organized by one of today’s panelists and active thinker/writer in this area, Gillian Hadfield of USC School of Law. The name and focus of this event is “Building Better Lawyers.”

Live Blogging:

9:20am

Phoebe Haddon, Dean of MD Law School begins off the morning. This conference hopes to be a bit different than the recent conferences on the changes in the legal profession. She notes that the profession is calling into question whether the traditional employment model of recent grads going into law firms will remain the status quo. Dean Haddon is touching upon most of the recent conference topics. She notes that this focus is on law schools and law students and what they will be experiencing as they leave school and seek employment.

Working collaboratively and approaching problems from an interdisciplinary way are key going forward - citing the 2007 Carnegie Foundation report on legal education. It highlighted the gap that exists between legal and practical knowledge.

What should we be advising students in regards to these challenges?

In thinking of the much often touted “having a global vision” – this is a mutual and shared sense of problem solving and how we confront the social and economic problems found in the world.

University of MD School of Law has created the Leadership, Ethics and Democracy (LEAD) program – law schools have an obligation to prepare law students for the leadership roles they will find themselves in later in their career. This is a growing trend for more “leadership” within both the profession as thus in legal education.

9:30am

First Panel “Changes in Big Law Firms and the Issues These Changes Raise.”

BH: Highlighting the past models and economics circa 1948 – in short much smaller firms – much smaller profits. Then came the Cravath Model. The Chicago Lawyers study “Two Hemispheres Theory” – look at who’s the lawyers clients are - 1975 50/50 personal lawyers versus corporate - 20 years later the hemispheres shifted – 2/3 were then working for corporate interests.

Highlighting how the lawyer population has outpaced total population increase. Yet the ABA is reluctant to say we have too many law schools.

Class of 1991 entry level salary was $40k. 8% to 10% making $70-80k. In 2007 the median is $65k. 20% making between $120 to 140k per year. Law school grads have become too expensive to train – citing how more and more clients refuse to pay for 1st or 2nd year associates. This coincides with the on-going structural change – nature in the client/lawyer relationship is changing. GC motto is “do not let legal costs outpace revenues”

The old broken model – flipping Cravath model on its side. Associates now equal loss – partners still equal profit. New model demands expertise beyond lawyers – folks such as Specialists, Project Managers, Team Leaders, Price Estimators are more and more in demand.

Future Models

Mentioning Susskind’s Book “End of Lawyers.” Society wants us to move along the path towards commodity (iPods, Blackberrys, are innovations that are commodities yet valuable to both maker and consumer.) Lawyers need offer both to but also stay up in the specialized arenas.

9:54am

Marc Galanter: Looking at profession in year 2020. We probably know just as much about what things will look like in 2040 as we do 2020.

How much of the larger legal profession could we have imagined ten years before? Change happens in certain periods of time. Outlines 4 major periods of change in the legal profession in the US (see below).

A 1935 – 1945

B 1960 – 1970

C 1985-1995

D 2010 – 2020

Now we are facing the next ten years (2010-2020). A great deal of change can be packed into a ten years time frame. This is a greatly unstable period – perhaps more so than any previous. Legal profession is growing but much more slowly – and it is getting older in terms of its ranks. Firms are becoming more elastic – new titles and employees (true employees). Competition between lawyers within firms is higher. Firms are incapacitated in solving the lifestyle problem. Greatest challenge is the new information order that arrived in the late 70’s – proliferation of press and information technology.

Facing challenges form new areas – outside capital. Are there states that want to take the lead on this? Capitalization will accelerate the innovation and technology use by such a firm further undercutting those firms that do not.

Looking ahead all we really know is that change is ahead – status quo no longer

10:18am

Michelle Harner: We are in a time of change for the legal profession more generally. Law firms are right-sizing. That is normal part of an any organization’s evolution.

Lawyers at Big Law “add value” – To create and find solutions that are not in the forms and treatises. Clients hire creative problem solvers and skilled technicians.

Pushing back on all this talk of change – there is a lot of noise out there about how we need to fix the legal profession and the death of big law. Not sure they reflect the majority of opinions out there.

We are doing a disservice to clients if we buy into all this noise. There is room for unbundling and outsourcing. Let’s not undervalue what it is lawyers and legal educators do.

10:23am

Lisa Fairfax: Agrees with Michelle Harner’s comments regarding “noise” out there but does highlight some disconnects that must be rectified.

Disconnects in the profession:

Last year more than 12000 people were laid off yet in Sept 2009 more than 60,000 sat to take the LSAT (largest ever). We have an absorption problem – how can law firms absorb all of these folks?

We are still training lawyers as if they are in a 1947 practice.

Group decision making is yet another disconnect. Mention “group project” in law school and students run screaming. Yet in firms lawyers and other must work together – especially with clients.

10:33am

Neil Dilloff - Been in a large firms for 33 years.

1.Large law firms will not vanish – these claims are premature. BUT things have changed. Competitors are coming from “spin-offs”

Sophisticated clients hire lawyers first, law firms second. Going with the old “you do not get fired for hiring IBM” - but regardless in most cases it is the lawyer not firm that is hired

2.Firms are looking for grads with judgment, people skills, sensitive to integrity and honesty, and people that are “workplace” ready. Law firms need help from law schools in this preparation and training to make them client ready /business ready.

3.Lectures are good but practice is better – immersion. Start in 3rd year in stuffing their heads with as much practical knowledge as possible

Truth in law firm training: If you are lucky and you are assigned to the right partner you will get opportunities to actual learn and do something. Assigned to wrong partner and you will sit in a room and what to “blow your brains out.” I try to bring the law firm into the classroom as both an educator and a practitioner.

Gillian Hadfield: The IX Challenge in her classroom: Legal Entrepreneurship - presented students with a challenge concerning a true start-up company. The CEO stated that the company was not closing deals fast enough. In part because the contract is too long boring, dry, and daunting. We all get excited but then have to deal with the contract.

So how to create a contract that is smaller, simpler and still protects us? Form 10 pages to 2 or 3? This was the project for the class. Failure – solutions longer or minimally reconfigured could not get is smaller than 10 pages.

It was a success from the teaching perspective. It reminds us that it is rally hard to teach all of this stuff.

Where are the “garage guys” in law? The young ones who drop out and go set up and innovate some cool idea to change the world. The adage in Silicon Valley is that somewhere there is a 26 year old working on killing your business model. In law we have no such thing.

Today’s lawyers and students do not have the inspiration or skills to tackle innovation. The growing value gap is increasing the dissatisfaction levels of big law.

25 to 65 lawyers in this area. Mid-size firms have not been tacking large firm in terms of impact from economic downturn. Midsize business models are fundamentally different. Hardly any have lines of credit. They may be a bit more flexible in the management operations thought most do no t have formal management structures.

Mid size firms rely less on leverage of associates – as in most first year associates gain real experience sooner that big firm – further, mid-size have less of a budget for training so they train through real experience.

Lawyers may be self selected for lack of creativity. Law students do not question authority.

Harvard, Yale and NYU do not even have UCC course some not even professors yet lawyers can make a wonderful living practicing it.